What happened
Shares of Gap (GPS 0.55%) were plummeting this morning after the company said late yesterday that it's cutting its growth outlook for the current quarter and announced that Old Navy's CEO is leaving the company.
Gap's stock was down by 19.1% at 11:11 a.m. ET.
So what
Gap's management said in a press release that Old Navy CEO Nancy Green is leaving the company and that "we believe now is the right time to bring in a new leader with the operational rigor and creative vision to execute on the brand's unique value proposition."
Image source: Getty Images.
Any major management change is usually a red flag for investors. And what the company said next in the release didn't ease investors' angst.
In the release, Gap management said that in light of "macroeconomic dynamics as well as the execution challenges of the Old Navy brand," the company is revising its sales forecast to a decline by low-to-midteen percentages year over year in the quarter.
That updated outlook is worse than the mid-to-high-single-digit sales declines that the company had previously forecast.
Now what
Gap's management said that it will provide updated fiscal 2022 guidance when the company reports its first-quarter financial results on May 26.
Investors may want to be prepared for some more volatility from the company's stock, as the new revenue guidance indicates that investors may not like what they see when the company reports its results next month.
And with Old Navy looking for new leadership, investors may have to be patient before they see a turnaround for this segment of Gap's retail brand.
